Allocation (“Going on Allocation”)

Allocation refers to a supplier practice of apportioning its reduced output among multiple suppliers as a result of an event - such as a factory flood or fire - that limits overall capacity/output below normal production and shipment levels. A supplier may reserve a higher proportion of their limited or reduced output for customers with a more favorable contract or relationship. A customer that receives a reduced proportion of a supplier's capacity relative to its normal volume is said to "go on allocation."

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